Is a Short Sale Right for you?

If you've been unable to keep up with your mortgage payments, it might seem like your only option is foreclosure.  There is, however, another option.

You may be able to do a short sale on your home before foreclosure.  Here are the advantages & disadvantages to consider before doing a short sale.

What is a short sale?

A short sale is when a property is sold at a lower price than the amount the homeowner owes on the mortgage, & the mortgage lender agrees to the "short" payoff.  Banks & lenders have specific rules on which properties qualify fort a short sale.  If you decide on attempting a short sale in lieu of a foreclosure, call your lender.  You will need official approval, as the lender is agreeing to a discounted payoff.

Pros & Cons

The advantages of a short sale:

• Your loan will be considered paid in full.
• You'll avoid foreclosure.
• A short sale has a smaller impact on your credit.
• After a short sale, you may be able to buy another home sooner than you would with a foreclosure.

The disadvantages of a short sale:

• You take full responsibility for the sale of your home, which can be time-consuming.
• If you find a buyer quickly, you have have to move sooner than expected.
• All proceeds from the short sale go to the lender.

Impact on your credit

A foreclosure puts a serious black mark on your credit history that will last for seven years & hamper your ability to get loans & credit in the future.  There is also a time limit after a foreclosure in which you will not be allowed to buy another home.

A short sale doesn't have the same impact as a foreclosure, but your credit will still be damaged & you may struggle to find a lender that is willing to give you another mortgage soon after a short sale.

Getting help

If you're unsure whether a short sale is right for you, speak to a real estate attorney.  A real estate attorney can review your situation & help guide you to the best solution.  You can also peak to your lender.  Your lender has specialized loan officers who are able to review & guide consumers at risk of foreclosure.

Shared from:  Susan Wellish www.realtor.com